Long-term care insurance policyholders should expect rate hikes, two of the most prominent vendors in the market have announced.
Leaders of Manulife Financial Corp., the parent company of John Hancock Life Insurance Co., stated they will seek to raise premiums on existing policies by an average of 25%. The announcement came during a third-quarter earnings call Thursday.
Another large insurer, Genworth, also said it will pursue rate increases. These likely will be in the 6% to 13% range for in-force business purchased between 2003 and 2012, according to the company’s quarterly earnings report. Premium increases could be more significant for policies written earlier than 2002.
Other insurers also recently have increased premiums substantially or exited the long-term care market altogether. The California Public Employees’ Retirement System raised monthly rates by as much as 85% for some of its long-term care insurance policies, effective in 2015. The decision has led to a lawsuit.
A number of issues have necessitated the rate modifications, including miscalculations about how many people would maintain their policies and the true costs of claims, as people are receiving benefits longer than the insurers anticipated when designing these products.